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Supreme Court justices sent a sprawling consumer class-action case back to lower court, declining to answer a question on the fairness of an $8.5 million Google settlement that earmarked money for lawyers, universities and organizations — but not the millions of allegedly harmed search engine users.
Frank v. Gaos could have been a showdown on the fairness of so-called “cy pres” class-action settlements, where money awards go to uninvolved parties that have a big-picture link to the case’s issues, rather than to affected class members.
Instead, eight of the high court’s nine judges said they had “substantial questions” on whether the consumers had the standing to bring the case.
Back in 2013, Google /zigman2/quotes/205453964/composite GOOG +0.08% settled the case about perceived privacy violations with a $8.5 million pact that gave $5.3 million to six universities and organizations — who were supposed to use the money to research internet privacy — another $2.12 million in attorneys fees and $5,000 each of the three named plaintiffs.
But several of the class members challenged the deal, which, they said, shortchanged consumers like them and the other 129 million class members. One of the objectors, attorney Ted Frank, argued the case, insisting these kinds of settlements put lawyers’ interests over the people they’re supposed to represent.
He’s often challenged class action deals and is now petitioning the Supreme Court to take up another case.
Attorneys for Google and the class members said these kinds of settlements were rare and appropriate under the circumstances. The donations to universities did far more in the grand scheme than 4-cent checks, they said. Some of the money the universities received was earmarked for educating consumers about online privacy risks.
The case centered on how URL strings could transmit user search terms to third-party websites. Google didn’t admit liability and added more online disclosures.
The settlement money was slated for AARP, World Privacy Forum, Carnegie Mellon University, Chicago-Kent College of Law, Harvard University and Stanford Law School. The ruling put a freeze on the settlement, according to Frank.
The Supreme Court on Wednesday said they weren’t signalling what they thought about the case’s standing issues. Still, the high court said the matter had to be addressed, given changes in the law.
Only Justice Clarence Thomas wanted to push on to the settlement, which he said shouldn’t have been approved. The agreement “provided members of the class no damages and no other form of meaningful relief,” Thomas wrote in his dissent.
Standing to even sue is a critical legal hurdle that shows up again and again. Last week, Facebook /zigman2/quotes/205064656/composite FB -0.95% made standing a key part of its defense against users who said they were wronged by the social media platform in the Cambridge Analytica scandal. Because the users allegedly couldn’t show how they were actually hurt in the massive information-sharing fiasco, they lacked a leg to stand on, Facebook contended.
Frank, litigation director at the Hamilton Lincoln Law Institute, said the case would now go back to appellate judges in the Ninth Circuit, who would decide whether to kick it to the Northern District of California or decide the matter themselves.
“The day of reckoning has been postponed,” he told MarketWatch. “But the writing is on the wall.”
Attorneys for Google and the class members could not be immediately reached for comment.